The question most organisations land up asking is, “Do we need an ERP?” What will be more relevant to ask is – “Where we are, where we want to be and, in order to get there, what is the best enabler?” There is hardly much choice. While each organisation has the freedom to decide on coordinates of its existence in the domain of space and time, the ground reality is that all organisations have to confront the fact that the old ways of doing business simply don’t work anymore in today’s highly competitive and changing environment.
All of a sudden, the world is a different place. The “here and now” crisis of competitiveness that corporations face today is not the result of a temporary economic downturn or of a low point in the business cycle. In today’s environment, nothing is constant or predictable. We can no longer count on a predictable market growth, customer demand, product life cycles, the rate of technological change, the nature of competition and even business cycles.
More to the point three forces, separately and in combination, are driving today’s companies deeper and deeper into a territory that most of their executives and managers find frighteningly unfamiliar. We call these forces the three Cs: Customers, Competition and Change. Their names are hardly new but the characteristics of the three Cs are remarkably different from what they were in the past.
If costs were high, they could be passed on to the customers. If new products were slow in coming, customers would wait. If customers were dissatisfied, they had to put up with it. The key managerial job was to manage growth and the rest did not matter; not anymore, which is the issue today.
These forces can be explained as: Customer: Since the early 1980s, in all the developed countries, the dominant force in the seller-customer relationship has shifted. Sellers no longer have the upper hand; customers do. Customers now tell suppliers what they want, when they want it, how they want it and what they will pay. This new situation is unsettling to companies that have known life only in the mass market. Competition: The second C is competition. It used to be so simple– the company that could get to the market with an acceptable product or service, at the best price would get a sale. Now, not only does more competition exist, it’s of many different kinds.
Niche competitors have changed the face of practically every market. Similar goods sell in different markets on entirely disparate competitive basis: in one market on the basis of price, in another on selection, somewhere else on quality and elsewhere on service before, during or after the sale.
With trade barriers falling, no company’s national turf is protected from overseas competition. Good performers drive out the inferior, because lower the price, higher the quality, the best service available from any one of them soon becomes the standard for all competitors. Adequate is no longer good enough. If a company can’t stand shoulder to shoulder with the world’s best in a competitive category, it soon has no place to stand at all. Change: Change is the third C. We already know that customers and competition have changed but so has the nature of change itself. Foremost, change has become both pervasive and persistent. It is treated as normal.
Not long ago, for example, life insurance companies offered only two products: term and whole life. Today, they supply a constantly changing smorgasbord of products and the competitive pressure on insurance companies to create new products is constantly increasing.
Moreover, the pace of change has accelerated. With globalisation of the economy, companies face a greater number of competitors, each one of which may introduce product and service innovations to the market. The rapidity of technological change also promotes innovation. Product life cycles have gone from years to months. Ford produced the Model T for an entire human generation. The life cycle of a computer product introduced today might stretch to two years, but probably won’t.
The point is that, not only have product and service life cycles diminished but so has the time available to develop new products and introduce them. Today, companies must move fast or they won’t be moving at all.